The embattled copyright trolling firm Prenda Law is seeking to contain the fallout from a looming identity theft scandal by voluntarily dismissing lawsuits filed by the shell company AF Holdings. A Minnesota man named Alan Cooper has charged that Prenda fraudulantly used his name as the CEO of AF Holdings, allegations that have attracted the attention of a California judge.

Ken at the legal blog Popehat broke the news that Prenda attorney Paul Duffy has sought dismissal of at least four pending infringement cases involving the Prenda-linked shell company AF Holdings. All four dismissals occurred in the Northern District of Illinois.

An investigation by Ars Technica found two other cases, also in the Northern District of Illinois, in which AF Holdings requested dismissals.

Of the six dismissals, three were "with prejudice," meaning that AF Holdings cannot bring suit again in the future. In one case, Prenda dismissed the charges even though a default judgment had already been entered against the defendant.

Duffy also posted a "Notice of allegation" in each case regarding the Alan Cooper controversy. "Plaintiff categorically denies Mr. Cooper’s allegations, which arise nearly two years after certain of the alleged conduct occurred," Duffy wrote. "Plaintiff is treating Mr. Cooper’s allegations with utmost seriousness and is investigating their substance."

Of course, as Ken points out, there's some tension between these two claims. If Prenda knows Cooper's charges are false, then what is there to investigate? And if Prenda has done nothing wrong, why is it suddenly dismissing its lawsuits?

Most of the pending AF Holdings cases around the country are still active. Ars Technica checked dockets in Arizona, Virginia, and Tennesssee, and did not turn up any dismissals filed this week. Nor did Duffy file a "notice of allegations" in most of these cases. Perhaps these other cases involved different copyrighted works whose copyright assignment statement did not bear Cooper's allegedly fraudulent signature.

"Paul Duffy is very likely doing the right thing legally and ethically by dismissing the cases and informing courts of the allegations against Prenda Law," Ken wrote. But dismissing these cases now is not going to save Duffy or his colleagues from the wrath of Judge Otis Wright.

Most of the pending AF Holdings cases around the country are still active. Ars Technica checked dockets in Arizona, Virginia, and Tennesssee, and did not turn up any dismissals filed this week. Nor did Duffy file a "notice of allegations" in most of these cases. Perhaps these other cases involved different copyrighted works whose copyright assignment statement did not bear Cooper's allegedly fraudulent signature.

Hmmm... so that means there are other instances of identity theft that other judges will be hearing about? It's pretty established already that Steele and Hansmeier et al were keen to preserve plausible deniability for their shady doings, so we know none of their names will ever appear....

I'm enjoying this saga in a manner quite different from the Carreon debacle and long before that the Thompson years. Those guys were clownshoes crusaders, full of bluster, absent any form of self-restraint and quite possibly mad. These guys are different. They didn't want to change the world, they just wanted to get rich. They appear to have genuinely believed they were smarter than everyone else. Watching them find out how incredibly incorrect that belief could be has been hugely entertaining.

As a layperson I'm guessing that these dismissals are somehow "tactical" though I have no idea how or why. It seems as though Prenda doesn't do anything unless they see an upside, I don't why they would give away a default judgement unless they stood to gain from it.

Most of the pending AF Holdings cases around the country are still active. Ars Technica checked dockets in Arizona, Virginia, and Tennesssee, and did not turn up any dismissals filed this week. Nor did Duffy file a "notice of allegations" in most of these cases. Perhaps these other cases involved different copyrighted works whose copyright assignment statement did not bear Cooper's allegedly fraudulent signature.

Hmmm... so that means there are other instances of identity theft that other judges will be hearing about? It's pretty established already that Steele and Hansmeier et al were keen to preserve plausible deniability for their shady doings, so we know none of their names will ever appear....

This is an interesting thought - It's quite likely that they used the same MO on these other cases and this is an attempt to get them out of the court system before anyone notices.

Anyone have access to PACER and want to try cross-linking copyright holder's names to people Steele/Hansmeier et al know tangentially? I'm betting there's probably a few more who they know well enough to have seen their signatures but not so well that they talk regularly (and who aren't very computer-savy) who might be interested in what's been going on in their name...

Seriously though, as much as we all enjoy a train wreck (well at least ones full of trolling lawyers), this case is important as it highlights not just the shadiness of these schemes but the inherent abuse that our legal systems allows. I would like to see some real discussion come forward on how the legal system is unbalanced to the point of allowing such schemes to exist in the first place.

I've been following this saga on ars for awhile now and I just had to finally chip in. I met John Steele at a hot dog joint in Miami a year and a half ago. I was there for the art fair, but I ended up talking to him for over an hour. Here's what I wrote about him as a bit of color for the piece I was writing on the art fair:

"Later, I shared a sandwich with a beefy looking man at Le Sandwicherie on 14th and Collins. “You heard of the 1%? I’m the .3%,” he said. He then proceeded to tell me how he’d figured out how to track individuals who download porn with bittorrent clients, and then sue them on behalf of the porn sites. Invariably, they settle. “This watch doesn’t just look like it’s made of gold,” he said as he walked across the street to Club Deuce. It was 4am, and the bars were still open for at least another hour."

He was entirely open about the whole thing, as long as he framed the conversation so I guessed what he was leading me towards. He seemed like a scary genius. Made quite an impression. Looks like he didn't fill me in on everything he was doing but he came close. Shameless.

It seems as if Prenda's hole is getting deeper faster than they can shovel their way out.

Or is it, one step forward and two steps back?

Steele was in FL... it is sinkhole season...

Personne wrote:

I don't get this. I mean I do but WTF.

You can sue and just drop it. No questions asked, sorry, my bad, moving along now. In bulk. With John Does.

Well the account holders who got the letters and phone calls threatening to attach their name to a porn title and to be on the hook for large sums of money were never named... so no harm no foul.So what if they might not have the copyrights, or be hiding who owns the assets, or a litany of other bad acts.

The part of this story that I'd like to get to the bottom of is whether the lawyers are de facto owners of the copyrights. If so, they would seem to have a direct pecuniary interest in the litigation, which, depending on the facts, can be a big no-no in attorney ethics that can potentially lead to disbarment.

I've been thinking about the California case some, and not having read the pleadings in the newly dismissed cases I can't draw any really firm conclusions, but here's something to consider . . . one of the issues with the California case is that Judge Wright (and I'm becoming a big fan of his) is on fairly shaky ground in ordering non-parties to the case (The Assclowns) to do anything because the Court's jurisdiction over The Assclowns is uncertain. The Court has clear jurisdiction over the named plaintiff and over any attorney who has entered his appearance in the case without reservation (Gibbs), and the Court has clear jurisdiction over anyone physically present in the jurisdiction (which is why noone from Prenda will go to Cali), but the Judge's recent order for Gibbs to serve The Assclowns is fairly unusual and might not stand up.

I'm thinking that the lawyer who entered his appearance in the recently dismissed Prenda cases is not Gibbs, and is instead someone who could do real damage to Prenda if taken to task in the dismissed cases. Prenda had to dismiss the cases or risk having a federal court have personal jurisdiction over a Prenda lawyer who knows something damaging to Prenda, so they pulled the plug (even in a case where they had a default judgment!) to prevent a federal judge from using contempt powers to compel testimony from whatever Prenda lawyer entered his appearance in the dismissed cases.

@bluedevilhen - when Gibbs admitted that Prenda had access to his signature, ECF, email it was demonstrated they were far more involved in the case than was thought (or might be legal). When it became clear that requested records for the case were sent not to Gibbs but directly to Prenda was another step. When Gibbs blamed the paralegal of Prenda for not filing things and it came out that she was still pursuing things after the court and put a stop to them was another step. The other assorted issues coming out, some of them memorialized in court transcripts and sworn testimony helped even more.

Prenda has always had the option to disprove every claim made against them, and instead resort to threats and intimidation rather than doing something wild like producing an Alan Cooper to defend his business that is under assault by these evil evil 'pirates' stealing millions from him.

The claims made in this case, in this court room raise serious questions and issues and the Judge is trying to get to the bottom of them.

Well the account holders who got the letters and phone calls threatening to attach their name to a porn title and to be on the hook for large sums of money were never named... so no harm no foul.So what if they might not have the copyrights, or be hiding who owns the assets, or a litany of other bad acts.

Actually, what they threatened to do was sue if the defendants did not settle. I imagine most of their targets ignore them but they feel like they have to sue some of them to keep the threat real enough that a percentage of targets pay up.

I don't think it's necessarily unethical for a law firm to own copyrights and sue people over infringements. Lawyers are certainly allowed to sue people, either representing clients or representing themselves. The problem with Alan Cooper is that they named him as the CEO of their client / shell company AF Holdings and he was (according to his sworn testimony) never any such thing. So all the AF Holdings suits are tainted. But if in some of their other suits they represent real clients, or if they are suing regarding copyrights that Prenda Law or its subsidiaries own, those suits can go forward.

So here is the question I have, if there are any lawyers that can help me with this. Prenda has apparently made huge amounts of money from people by threatening to reveal their purported wrongdoing. Now, if it is found they didn't have standing to sue, because for example the lawyer can't also be the client if there is a pecuniary interest, then here is the big one: in what way does what they are doing not constitute straightforward BLACKMAIL? You know, forcing people to pay you to avoid revealing their secret?

I've been following this saga on ars for awhile now and I just had to finally chip in. I met John Steele at a hot dog joint in Miami a year and a half ago. I was there for the art fair, but I ended up talking to him for over an hour. Here's what I wrote about him as a bit of color for the piece I was writing on the art fair:

"Later, I shared a sandwich with a beefy looking man at Le Sandwicherie on 14th and Collins. “You heard of the 1%? I’m the .3%,” he said. He then proceeded to tell me how he’d figured out how to track individuals who download porn with bittorrent clients, and then sue them on behalf of the porn sites. Invariably, they settle. “This watch doesn’t just look like it’s made of gold,” he said as he walked across the street to Club Deuce. It was 4am, and the bars were still open for at least another hour."

He was entirely open about the whole thing, as long as he framed the conversation so I guessed what he was leading me towards. He seemed like a scary genius. Made quite an impression. Looks like he didn't fill me in on everything he was doing but he came close. Shameless.

Most con men and criminals believe they are smart enough to avoid detection and eventual conviction. They fail to understand they must never make a mistake and be somewhat lucky while the investigators do not need to be perfect in most cases. The problem Prenda has is that there will be a paper trail created to form all the shell companies and people have seen shell companies abused before that this will create interest in the relationship between each.

@bluedevilhen - when Gibbs admitted that Prenda had access to his signature, ECF, email it was demonstrated they were far more involved in the case than was thought (or might be legal). When it became clear that requested records for the case were sent not to Gibbs but directly to Prenda was another step. When Gibbs blamed the paralegal of Prenda for not filing things and it came out that she was still pursuing things after the court and put a stop to them was another step. The other assorted issues coming out, some of them memorialized in court transcripts and sworn testimony helped even more.

Prenda has always had the option to disprove every claim made against them, and instead resort to threats and intimidation rather than doing something wild like producing an Alan Cooper to defend his business that is under assault by these evil evil 'pirates' stealing millions from him.

The claims made in this case, in this court room raise serious questions and issues and the Judge is trying to get to the bottom of them.

I tried to couch my previous post in probabilities . . . jurisdiction is fairly shaky, the order fairly unusual. A brief review of federal precedents did not turn up too many cases where a judge invoked contempt powers over a non-party unless the non-party was present in Court, with some exceptions in bankruptcty and labor relations. The fact pattern Judge Wright is looking at may well justify his actions, and we all hope he gets to the juicy liquid center of this case, but my previous point was that a useful angle of inquiry might be to see if the recent dismissals shared common counsel, and if so try to draw inferences from the counsel's identity. Right now Gibbs looks like a "fall guy". Maybe the non-dismissed cases also have "fall guys" in their respective states. But maybe the lawyer(s) in the dismissed cases were too close to Prenda to be "fall guys" . . . that would tell us something about the players in Prenda, and would encourage agressive anti-troll counsel to find pending Prenda cases where the same lawyer had entered an appearance, and attempt to make some hay in those cases.

These quick dismissals are only possible where no defendant has filed an Answer, if an Answer has been filed then the plaintiff needs consent of all parties or the blessing of the court to dismiss. The mother lode would be to find a case, not yet dismissed, with an Answer filed, with the same Prenda lawyer as the dismissed cases. You take that case and try to blow it up like the case before Wright, but without the personal jurisdiction problem because the non- "fall guy" Prenda lawyer will already have entered an appearance. More popcorn and gummi bears for all.

How much of this sort of debacle would be avoided (or, at least, more easily tracked) if demand letters like Prenda has been sending for years had to be registered with the court? Even like a $5 filing fee would put a noticable dent in someone like Prenda's budget, and the courts could just run a quick report and see, Oh yeah, these Prenda Guys? They've issued 5,000,000 demand letters and filed 2 suits. Maybe we should look into that...

On the other hand, in legitimate cases, a $5 filing fee wouldn't even be a blip compared to coffee and pens.

What would be interesting is to see how many letters Prenda has sent since getting names from Verizon in response to a withdrawn subpoena. If Prenda has sent letters to any of those Verizon customers then all concerned are likely to be in very serious trouble.

Timothy B. Lee / Timothy covers tech policy for Ars, with a particular focus on patent and copyright law, privacy, free speech, and open government. His writing has appeared in Slate, Reason, Wired, and the New York Times.